The next Foxconn and Illinois: Here's why Wisconsin will be the state growing more taxpayers

Foxconn, one of the world's largest electronics manufacturers, unveiled plans to build a new factory in southeastern Wisconsin, delivering a much-needed win for President Donald Trump and Gov. Scott Walker, R. (July 26, 2017) (Sign up for our free video newsletter here http://bit.ly/2n6VKPR)

Foxconn, one of the world's largest electronics manufacturers, unveiled plans to build a new factory in southeastern Wisconsin, delivering a much-needed win for President Donald Trump and Gov. Scott Walker, R. (July 26, 2017) (Sign up for our free video newsletter here http://bit.ly/2n6VKPR)

Illinois recently got a humiliating rejection notice from Foxconn, the Taiwanese tech giant. Foxconn picked Wisconsin over struggling Illinois and other states for the proposed site of a $10 billion LCD panel factory that will employ up to 13,000 people. These mega-projects don't happen every day, so Foxconn's decision hurts because job growth is the only way to solve Illinois' fiscal crisis: More jobs means more tax revenue.

What really stings, though, is how the winning site is just across the state line in southeast Wisconsin. It's as if Foxconn settled on the Midwest as a location and then decided: We want to be as near as possible to Illinois without actually being there.

Foxconn Chairman Terry Gou gave an interview to Steve Jagler, the business editor of the Milwaukee Journal Sentinel. Gou gave Jagler eight reasons why Foxconn chose Wisconsin. Two of them were — literally — proximity to Illinois: First, Wisconsin is conveniently located in the central U.S., "close to Chicago, a global hub," the Journal Sentinel reported. Second, Wisconsin has the transportation and logistics to accommodate Foxconn's growth, and is ... near O'Hare International Airport. Feel free to smack your forehead.

Now play along as we study more of Foxconn's list of Wisconsin attributes to see how many also match Illinois. A manufacturing mecca? Yes, that's Illinois, too. Strong university and technical college systems? Yes. Energy reliability? Yes. Proximity to Lake Michigan water supply? Well, duh. Foxconn also likes Wisconsin because it's home to allied companies such as Rockwell Automation, but Illinois is just a quick drive south.

The final reason Foxconn picked Wisconsin over Illinois is the difference-maker: government cooperation and competence. The Journal Sentinel wrote that Gou believed "the responsiveness of the public and private partners in Wisconsin far exceeded those of other states." Gou singled out the cooperation of Gov. Scott Walker, U.S. House Speaker Paul Ryan, R-Wis., and local business groups: "These key people pushed very hard."

Chris Kleponis/CNP / TNS

Wisconsin Gov. Scott Walker speaks during the July 26, 2017 announcement at the White House in Washington, D.C. about the creation of a Foxconn factory in Wisconsin to build LCD flat screen monitors. With Walker is House Speaker Paul Ryan (R-Wisc.), center, and Foxconn CEO Terry Gou, right.

Wisconsin Gov. Scott Walker speaks during the July 26, 2017 announcement at the White House in Washington, D.C. about the creation of a Foxconn factory in Wisconsin to build LCD flat screen monitors. With Walker is House Speaker Paul Ryan (R-Wisc.), center, and Foxconn CEO Terry Gou, right.

(Chris Kleponis/CNP / TNS)

In other words, Foxconn liked everything about Illinois, but Wisconsin officials convinced Gou they made the best business partners. How could that be? Wisconsin will provide $3 billion in tax benefits over 15 years, but incentives are the norm and Illinois, one of seven finalists, was willing to offer some. National politics could have been a factor, given that Foxconn would benefit from pleasing President Donald Trump, who hopes to win Wisconsin again in 2020. But companies don't make huge investment decisions just to make a president smile.

Here's the takeaway: Foxconn chose the state that has stable government, healthy finances and pro-growth policies for employers. Illinois has none of the above.

This state is deep in debt and badly run. A 10-ton anvil dangles overhead in the form of at least $130 billion in unfunded pension obligations. Taxes are too high, yet Illinois still can't pay its bills on time. Republican Gov. Bruce Rauner recognizes that Illinois isn't competitive. He wants to cut onerous regulations and make other reforms to attract business investment, but he's been stymied by House Speaker Mike Madigan, Senate President John Cullerton and their Democrat-controlled General Assembly.

None of this is secret. Business leaders looking to invest see Illinois, with its worst-in-the-nation credit rating and embarrassing Springfield stand-off that left the state without a budget for two years, and they cross Illinois off their lists. They don't trust Illinois government and don't want to be paying taxes here when the day of reckoning comes for the pension crisis.

Larry Gigerich of Indiana-based Ginovus, a site-selection firm, tells us Illinois will continue to miss opportunities until it stabilizes its public finances. Political leaders also will need to convince investors that tax increases and other necessary pain will be temporary, lest they scare off business permanently — and residents, too, we'd add.

But to accomplish anything, Gigerich notes, Illinois officials can't continue to undercut each other. "It looks like the legislature and leadership are just trying to run the clock out until the next election," he said. "People don't think that is the right way, or a sophisticated way, of running government. And that has really hurt with chief executives looking at Illinois, saying, 'There is no adult in the room'."

Foxconn chose Wisconsin for a reason: Wisconsin isn't Illinois.

To win the next Foxconn, this state has to reform its policies in such areas as taxation, worker's compensation and massive public debts. It has to start welcoming employers and jobs. That's the only way to grow more taxpayers.